Dent and Melville and Anor

[2009] FamCA 628

FAMILY COURT OF AUSTRALIA

DENT & MELVILLE AND ANOR [2009] FamCA 628

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)

Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Munday v Bowman (1997) FLC 92-784
Yunghanns & Ors v Yunghanns & Ors (2000) FLC 93-029

APPLICANT: Mr Dent

FIRST RESPONDENT: Ms Melville

SECOND RESPONDENT: F Solicitors

FILE NUMBER: MLF 3157 of 2006

DATE DELIVERED: 10 July 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 10 July 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Wainwright

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Mr Strum

SOLICITOR FOR THE RESPONDENT: Marshalls & Dent

COUNSEL FOR THE RESPONDENT: Ms Vohra

SOLICITOR FOR THE RESPONDENT: F Solicitors

Orders

1. That the husband’s application in a case filed 20 May 2009 be noted as discontinued.

2. That the husband pay the wife’s costs fixed in the sum of $19,919.78 and if not paid by 4.00pm on 10 August 2009, the wife may discharge the obligation of the husband by taking such payment from the sum due to the husband pursuant to Order 19(c)(ii) of the orders made on 23 April 2009.

3. That the husband pay the costs of the third party F Solicitors fixed in the sum of $3050 such sum to be paid by 4.00pm on 10 August 2009 and if not so paid then they be paid by the solicitors for the wife in addition to the sum due to the husband pursuant to paragraph 19(b) of the orders made on 23 April 2009 but subject to their being such extra funds available pursuant to paragraph 19(c)(ii) of the said order and if no such funds are available, then the sum outstanding be due and payable until otherwise paid.

4. That the reasons for judgment this day be transcribed and be made available to the parties.

IT IS NOTED that publication of this judgment under the pseudonym Dent & Melville and Anor is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3157 of 2006

MR DENT

Applicant

And

MS MELVILLE

First Respondent

F SOLICITORS

Second Respondent

REASONS FOR JUDGMENT

1. This is a case involving a property dispute which also had parenting issues that I determined on a final basis some months ago.  The proceedings were finalised by orders on 23 April after a hearing which was undefended.  The orders were appealed by the husband and, after filing a Notice of Appeal, he filed an application to stay the orders that I made.  That application was filed on 20 May. 

2. The application was opposed by the wife.  The third parties, who are the husband’s former solicitors, did not participate in the proceedings that came on before me on 1 June on the basis, I have been told, they did not see the notice of appeal as involving a challenge to the orders affecting them.  That position has now altered as a result of the completion of the appeal book index.  The matter came on for hearing before me on 1 June to determine the stay application. 

3. In what I can only describe as something of a twist in the tale, the applicant, through counsel, applied for an adjournment of the case.  In my reasons for granting the adjournment, I said it was unusual because to use his counsel’s words, “His lawyers were unable to properly obtain instructions to argue the stay itself.”  Having had some concern about what was happening, I adjourned the matter to give the husband an opportunity to get his house in order and, for that reason, I adjourned the matter to today. 

4. On the afternoon of Wednesday, so just over one business day ago, the husband filed a Notice of Discontinuance of the application and I am told served by fax, letters to the solicitors for the wife and also to F Solicitors. 

5. The rules make it clear that if a party discontinues the proceedings, the respondent to, or other party to, the proceedings is entitled to make an application for costs. 

6. Today the application for costs has been made by the wife and it is on an indemnity basis.  The application is also made for costs by the third parties and, although they also seek indemnity costs, the reality is that it makes very little difference having regard to the disparity between the scale and what is their cost agreement rate. 

7. Costs orders are opposed by the husband. 

8. It must follow that as at mid afternoon on Wednesday of this week, the husband had to pay the costs of the other two parties having regard to the fact that he was withdrawing his own application. It does not necessarily follow that the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”) do not still apply, but the bizarre situation here is that it was the husband’s application on 1 June to adjourn his own application and now, as late as a day ago, he withdraws it.

9. I cannot see any justification, which is the criterion upon which a costs order is made other than to depart from the principle that each party pays their own costs.  In a case like this, the husband must be responsible for at least the costs up until Wednesday afternoon.  As I put to the solicitor for the husband, what would have alleviated the dilemma today would have been for him to have turned up on Wednesday afternoon with, and I use the words, “a cheque book,” but by reality I meant an offer of settlement of the costs.  No such offer was made. 

10. Both the wife and the third party served notice yesterday indicating that they would settle the costs issue upon the payment by a certain time of some funds.  In the wife’s case, they sought $6039.34 by 4 o’clock yesterday afternoon.  I must note however that of that sum it appears that it included some previous costs that I had ordered which had not been paid. 

11. In the case of the third party, the letter from F Solicitors said they would accept $2450 plus GST. Having regard to the fact that the offer of settlement was made which is a factor set out in s 117(2A), it is hard for me to say anything other than the parties are justified in departing from the rule that each party pays their own costs and the husband should pay their costs.

12. The question then remains as to whether those costs ought to be ordered on an indemnity basis.  The three primary authorities that guide this court in relation to indemnity costs are Munday v Bowman (1997) FLC 92-784, Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 and of course the Full Court of this Court’s decision in Yunghanns (2000) FLC 93-029. All of those decisions refer to unusual features or things such as misconduct. But the underlying principle is that the criteria are not closed.

13. There is no clear cut guideline from any authority as to what a court should determine an indemnity costs case upon other than the fact that the court has to exercise a discretion judicially.  It seems to me in this case, having regard to not only the material set out in the wife’s affidavit to which Mr Strum has drawn my attention, making it abundantly clear that the wife was going to oppose the stay application on the basis that the husband had not been honest with the court, nor had he made any attempt to ameliorate his own position, that the stay application may not have succeeded.

14. In Munday v Bowman that was one of the criterion that Holden J talked about as a basis of making such an order. That is, there was no chance of success. I am still bound by the provisions of s 117 in any event, and I have taken into account all of the circumstances in s 117(2A) including the financial circumstances of the parties which in this case are not insignificant.

15. There is no suggestion that any party is involved with a Legal Aid grant. 

16. The most important thing that concerns me arising out of s 117(2A) is the question of the offer of settlement. There were offers made yesterday that would very much have ameliorated the problems of both the wife and the third party.

17. It is a discretionary exercise but in my view this is one of those clear cases where an order for indemnity costs should be made having regard to the fact that the husband has put all of these parties to considerable trouble.  I am aware in respect of the wife from a previous hearing that she has committed herself to a costs agreement and that is one of the matters that I am obliged to take into account in terms of an indemnity costs order. 

18. I do not know the position in relation to F Solicitors but I can presume that having regard to the fact that the party themselves is a firm of solicitors, they would be presumably not be charging themselves at a rate consistent with the scale.  In any event it probably matters very little because of the disparity between the scale and what they have in fact sought. 

19. As such it is a case in which I propose to make an order for costs against the husband in the sums sought by both parties.  In the case of the third party, I propose to make an order for $3050 payable within 30 days and if that sum is not so paid then subject to paragraph 19(c)(ii) of the orders that I made in the final proceedings, the husband’s obligation under this order is to be added to his obligations under the orders that I then made. 

20. In the case of the wife, the costs tendered to me are a claim of $19,919.78.  I see no reason in the circumstances why she should be put to the problem of having to pay her lawyers those sorts of fees having regard to what has occurred. 

I certify that the preceding Twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date: 17 July 2009